The East is coming West—that would be two Asian mobile pay apps. Alipay and WeChat Pay are the dominant mobile pay apps in China and have a combined base of over 1 billion users. As the following CNBC story reports, WeChat Pay wants to continue to add U.S. merchant locations.
Tencent will step up its efforts to expand its payment service WeChat Pay to the U.S., an executive at the Chinese technology giant told CNBC, hinting at more merchants coming on board later this year.
WeChat Pay allows users to show stores a barcode on their smartphone via the Tencent-owned WeChat messaging app. The shop scans the barcode, allowing a user to pay for an item or service with a Chinese bank account. WeChat has over 1 billion users and around 800 million of them use the WeChat Pay function.
Tencent has focused on expanding the payments service abroad, but it has stopped short of trying to create a local version of WeChat for other countries. Instead, the company has been focused on signing up merchants in many countries to accept WeChat Pay so Chinese tourists can use the payments platform abroad.
And Tencent is gearing up to announce that many more stores in the U.S. will accept WeChat Pay later this year.
“(The) U.S. is also a market we are focused on now … after July you will see a lot of merchants will accept WeChat Pay in U.S.,” Yin Jie, director of cross-border operation at WeChat Pay, told CNBC in an interview that aired on TV on Thursday.
“Actually now … in the airport and in some duty free shops, they already accept WeChat Pay … because (the) U.S. is a really big country and has a lot of merchants. We need to do it step by step,” she said.
Last year, Tencent partnered with Citcon, a mobile payments platform based in the U.S., to bring WeChat Pay to North America. But so far, there haven’t been many major stores accepting the service.
Mercator wrote a recent research report on this topic, “Asian Mobile Payment Apps As A Way of Life: A Look At Alipay, Paytm, and WeChat Pay.” Our view was that these mobile pay apps do not present a competitive threat to U.S. pay providers in the foreseeable future. Some legacy acquirers are partnering with them, for example, First Data and Alipay. The main targets of the Asian pays are Chinese tourists, business people, and students visiting the U.S. In the story, Tencent is confirming this, but also indicating its interest in small merchants as well. Unless they are frequented by Chinese visitors, there does not appear to be an opening in that retail segment. We will know more in the next few years upon seeing how many POS terminals will accept Alipay and WeChat Pay.
Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group
